China's Wanda agrees to mammoth asset sale to slash debt

China's Wanda agrees to mammoth asset sale to slash debt

China's Wanda agrees to mammoth asset sale to slash debt

Shares in Chinese hotel conglomerate Dalian Wanda rocketed by 155 per cent this morning after it announced a deal to sell properties and projects to rival Sunac.

Variety offers five possible reasons for the sale, including a reduction of the (possibly massive) debt incurred during Wanda's global spending spree over the last few years, avoidance of the growing regulatory scrutiny in China, and competition from Disney.

Among the projects included in the deal were the Nanchang Wanda City, which the company opened previous year and that Wanda chairman Wang Jianlin had talked up as a competitor to Disneyland Shanghai. The price tag for the hotels is 33.6 billion yuan.

To compete, Dalian Wanda had adopted a strategy of going for a smaller, cheaper parks in many more places.

Wanda, headed by one of China's richest men, Wang Jianlin, had been one of the most acquisitive companies overseas, spending billions on a range of United States entertainment properties.

Wanda had earmarked a more than 300 billion yuan investment for its cultural and tourism projects. Last August, Wanda signed a $9.3-billion co-development deal to build a sports-themed park in the city of Jinan, to include a 10,000-seat stadium, a mall, hotels, and other facilities.

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About the author Steven Schwankert is an award-winning editor and reporter with over 20 years of experience in Greater China, focusing on culture, media, exploration, and technology.

But they have reversed course as concerns grow over capital flight, a weakened Chinese currency, and potentially unsound acquisitions.

Yet none of the establishments being hived off were included under that entity, so that by the end of trade Wanda Hotel's stock had pared its gains to 46.55%. "Sunac could be seeking more exposure outside of just purely property development, as growth of Chinese new home sales will likely slow in the long-run". "The proceeds from the sale will be used to pay off loans".

Notably, the merger will not include USA movie studio Legendary Entertainment, which Wanda acquired for $3.5 billion in early 2016.

Sunac's shares in Hong Kong were suspended from trading ahead of what it said would be a "very substantial acquisition" announcement.

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